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Abstract The skin is our outer permeability and immune defense barrier against myriad external assaults. Aryl hydrocarbon receptor (AhR) senses environmental factors and regulates barrier robustness and immune homeostasis. AhR agonists have been approved by the FDA for psoriasis treatment and are in clinical trials for the treatment of atopic dermatitis (AD), but the underlying mechanism of action remains poorly defined. Here, we report thatOVOL1/Ovol1is a conserved and direct transcriptional target of AhR in epidermal keratinocytes. We show that OVOL1/Ovol1 influences AhR-mediated regulation of keratinocyte gene expression and thatOVOL1/Ovol1ablation in keratinocytes impairs the barrier-promoting function of AhR, exacerbating AD-like inflammation. Mechanistically, we have identified Ovol1’s direct downstream targets genome-wide and provided in vivo evidence supporting the role ofId1as a functional target in barrier maintenance, disease suppression, and neutrophil accumulation. Furthermore, our findings reveal that an IL-1/dermal γδT cell axis exacerbates type 2 and 3 immune responses downstream of barrier perturbation inOvol1-deficient AD skin. Finally, we present data suggesting the clinical relevance of OVOL1 and ID1 functions in human AD skin. Our study highlights a keratinocyte-intrinsic AhR-Ovol1-Id1 regulatory axis that promotes both epidermal and immune homeostasis in the context of skin inflammation, identifying new therapeutic targets.